We're posting up notes from the Invest For Kids 2016 investment conference. Next up is Arthur Kaz of Greenbriar Asset Management who pitched long Avaya bonds.
Arthur Kaz's Presentation at Invest For Kids Chicago 2016
• Long Avaya bonds
o 7% senior secured 1st lien notes worth par within a year
o Also buying 2nd lien notes at 43
• Company likely to file for Chapter 11 protection as soon as next month
• Revenue declining in shift from hardware to software, but margins are offsetting -- -7% sales but +7.7% EBITDA margins
• Lots of special charges and add-backs that can soon be addressed
• $200 million of interest expense
• Believes there is $850 million of EBITDA
o At 6x and with 4x leverage, believes first liens get 76 cents of cash and stock for ~2/3 of equity in reorganized company
o Room to be wrong on both EBITDA and multiple
Be sure to check out the rest of the presentations from Invest For Kids 2016.